The Puerto Rico Community Foundation - Maria del C. Arteta and William Lockwood-Benet
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The Synergos Institute Voluntary Sector Financing Program Case Studies of Foundation-Building in Africa, Asia and Latin America The Puerto Rico Community Foundation Maria del C. Arteta and William Lockwood-Benet 1997 The preparation of this series of case studies No part of this publication may be reproduced was made possible by support from the Ford or transmitted in any form or by any means Foundation, the Aspen Institute, the C.S. Mott without the permission of The Synergos Insti- Foundation and the Compton Foundation. tute.
The Puerto Rico Community Foundation Voluntary Sector Financing Program Case Studies: • The Foundation for the Philippine Environment • The Esquel Ecuador Foundation (Fundación Esquel-Ecuador) • Child Relief and You - CRY (India) • Foundation for Higher Education (Colombia) (Fundación para la Educación Superior - FES) • Philippine Business for Social Progress • The Puerto Rico Community Foundation • The Mexican Foundation for Rural Development • The Kagiso Trust (South Africa) Cross-Case Analyses: • Formation and Governance • Organizational Financing and Resource Generation • Program Priorities and Operations
Contents
Synopsis 1 Sources 32
Preface 3 Tables
Genesis and Origins 6
1: Support to the non profit Sector
Founding Factors 8 in Puerto Rico, 1985-1990 7
2: Sources of Funds 23
Governance 11 3: Uses of Funds 24
Mission 11
4: Donor Taxable Deductions 28
Governing Structure 11
Strengthening Governance 14 Annexes
Staffing and Organization 15 1: Organizational Chart 33
2: Mission Statement 34
Program Operation and Evolution 16
3: Past And Present Programs 35
Program Evolution 16
4: Financial Statements 1985-1994 37
Grantmaking Programs 18
Programs Sponsored by the PRCF 19
Programs Administered by the PRCF 20
Permanent Fund for the Arts 23
Financing PRCF 22
Sources of Funds 22
Uses of Funds 23
Fundraising Methods 24
Financial Management 26
Sources of Future Funding 27
Conclusion 30The Puerto Rico Community Foundation
Glossary of Acronyms
CENAD Centro de Adolecentes (Adoles-
cent
Center)
CHODOs Community Housing Development
Organizations
GDB Government Development Bank
for
Puerto Rico
HUD US Department of Housing and
Urban Development
IDEFI Instituto para del Desarrollo de la
Filantropía (Institute for the
Development of Philanthropy)
IREI Iniciativa para la Renovación de la
Escuela Intermedia (Initiative to
Reform the Middle School)
NGO Nongovernmental organization
NPRC National Puerto Rican Coalition
PFA Permanent Fund for the Arts
PRCF Puerto Rico Community Founda-
tion
PRMA Puerto Rico Manufacturers’
Association
936 Corporations operating under the
tax benefits of Section 936 of the
US Internal Revenue CodeSynopsis the island. These benefits were under attack
in the US government. By supporting the
Origins community Foundation, these 936 corpora-
The idea of establishing the Puerto Rico Com- tions hoped to demonstrate their commitment
munity Foundation (PRCF) began at a forum to Puerto Rico, thus enhancing their standing
sponsored by the National Puerto Rican Coali- in Washington.
tion (NPRC), a non profit organization led by
The founders had hoped that, in addition to
mainland (US) Puerto Ricans. Support for the
support from the 936 corporations and US
idea grew through extensive discussions
foundations, significant funding would also be
involving Puerto Ricans on the island and in
available from local corporate and individual
the US, as well as among businesses in Puer-
donors, but local donors have lagged behind
to Rico and US foundations.
the other sources. Two reasons for the rela-
The US foundations — led by the Ford tively less successful local fundraising are that
Foundation and the Carnegie Corporation, large local corporations prefer to give money
and the Rockefeller, Charles Stewart Mott, directly to charities close to their communities,
and MacArthur Foundations — supported the or they are already leading sponsors of United
creation of an indigenous foundation which Way (a workplace giving program).
would mobilize local and international
In 1986, the Foundation began accepting
resources and channel them as grants to
earmarked grants that it administers from other
community organizations and nonprofit orga-
donors. It also manages nine donor-designated
nizations. Susan Berresford of the Ford Foun-
family funds. Those donors benefit from the
dation explained "...our staff could not spend
PRCF's local expertise in grantmaking.
enough time in Puerto Rico to know the island
well enough to make good grants." The US The Ford Foundation has been the largest
foundations provided technical assistance donor to the PRCF, contributing $7.6 million,
which helped the PRCF start operations much in the form of challenge grants. Over $8
quickly. million has been received from 936 corpora-
tions. Today the PRCF's endowment stands
The PRCF "started big," with over half a
at $10 million.
million dollars in grants in its first year. Its
board believed that starting big would
increase the Foundation's visibility and
Governance
encourage both donations and inquiries about
The PRCF is governed by a board of direc-
grants.
tors, which meets four times a year and
approves grants over $5,000. Board members
may serve
Financing
a maximum of two three-year terms. Much of
One of the businesses active in the discus-
the discussions among the founders of the
sions, Schering-Plough, identified another
PRCF concerned board composition. US
major source of funding: US corporations
foundations and the NPRC wanted large
that, like Schering-Plough, received tax cred-
numbers of community representatives, while
its under Section 936 of the US Internal Rev-
business leaders stressed the importance of
enue Code for investing in manufacturing on
1The Puerto Rico Community Foundation
including recognized businesspeople in order
to raise funds. The founding board was mainly
composed of business and professional lead-
ers, while grassroots leaders were gradually
added.
The staff is led by a president and divided into
three areas: administration, development and
programs, each with its own director.
Program
The PRCF has five priority areas: economic
development, community development, art
and culture, and health and education.
The PRCF also manages an autonomous
Permanent Fund for the Arts with its own
program director and separate grants bud-
get.
In addition to grantmaking and grant interme-
diation, the PRCF directly administers pro-
grams, including the Institute for the Promo-
tion of
Philanthropy that provides training and techni-
cal assistance to philanthropic institutions
throughout the Caribbean.
2Preface northern counterparts . For example, they are
more likely to mix program operation with
Background
grantmaking. Many of them act as convenors
In Africa, Asia and Latin America, citizen par-
of civil society groups, as bridging institutions
ticipation through a range of civil society orga-
to other sectors of society or as technical
nizations has become a growing and vital
assistance and training providers.
force. Civil society organizations have brought
significant material and human resources from To distinguish this type of southern founda-
the community level to bear on poverty prob- tion-like organization from northern founda-
lems through donations of time, energy, mate- tions we can use a term such as "community
rials and money. development foundation" or "southern foun-
dation"
Locally managed and controlled organizations
or use a new term. One new term which has
that provide direct financial support to other
beenproposed is "civil society resource orga-
organizations within their societies have been
nization" or CSRO. This term refers to organi-
established over the last decade in many
zations which combine financial assistance to
southern countries. A few were established
community-based organizations and NGOs
twenty or thirty years ago. These organiza-
with other forms of support for organizations
tions are injecting critical financial as well as
or the civil society sector as a whole. In this
technical resources into local civil society and
series of papers we will use the terms "foun-
mobilizing resources from a wide variety of
dation" and "civil society resource organiza-
sources both domestic and international for
tion"
this purpose.
interchangeably.
Few of them were created with a single large
This expanding universe of foundations/civil
endowment, as was the case with most north-
society resource organizations around the
ern private foundations. Most of them rely on
world has not been systematically studied. As
a wide range of strategies to mobilize financial
one of the first steps towards developing an
resources including earned income contribu-
understanding of this sector, Synergos
tions from individuals and corporations and
responded to a request from a group of
grants from international organizations. Some
southern foundations. In April 1993, a group
managed donor-designated or donor-advised
of foundations from a dozen southern coun-
funds following the US community foundation
tries met with northern foundations and official
experience.
foreign aid agencies to discuss the emerging
General consensus over terminology has not role of foundations in strengthening civil soci-
yet been reached; these new types of organi- ety in Africa, Asia and Latin America. A major
zations are usually referred to as "founda- outcome of the discussion was a decision to
tions" or learn more about how these organizations are
"foundation-like organizations." Though many created, how they develop and evolve, and
of these organizations have adopted legal how they sustain themselves as philanthropic
identities as foundations or trusts, others are entities. The group decided on case studies
registered as nongovernmental organizations. and analysis as the most fruitful approach.
In general, they differ in many ways from their The Synergos Institute, which works with local
partners to establish and strengthen founda-
3The Puerto Rico Community Foundation
tions and other financing organizations, for publication.
accepted the task of producing case studies
on these organizations. These papers are one
of the products resulting from this effort. Use of the Studies
The eight case studies bring to light key fac-
Methodology
tors that have led these organizations to be
A Global Advisory Committee of southern
successful, and the studies document the cru-
foundations guided the two-year effort by
cial processes they have gone through to
Synergos. The advisors selected eight geo-
respond effectively to the needs of their
graphically diverse cases from over sixty orga-
national civil societies. Across the very differ-
nizations identified through an initial survey.
ent conditions that brought about their forma-
Local researchers were retained in each coun-
tion, the cases reveal that foundations/CSROs
try and the Synergos research team worked
can play a
with them and the Advisory Committee to
central and strategic role in strengthening civil
develop a
society. Their comparative advantage as
common protocol.
resource mobilizers enables them to have a
The protocol hypothesized four areas as key large effect both in stimulating new financing
to the operational effectiveness and sustain- and connecting financial resources to the
ability of southern foundations: origins and community-level where they can have the
genesis of the institution; institutional gover- greatest impact. In particular, they have
nance; program evolution and management; excelled at:
and financing. The case researchers studied
• providing seed resources for the growth of
these issues via
civil society organizations in their countries;
multiple data collection methods and sources.
The primary method was to conduct direct • leveraging diverse sources of financing for
structured interviews with individuals involved the projects and programs of civil society
with each case organization, including board organizations;
members or trustees, the managing director,
staff members, grant recipients, and other • assisting northern foreign aid to be
relevant organizations. In addition to inter- channeled to civil society in more sustain-
views, researchers gathered mission and able and
vision statements, annual reports, operating effective ways; and
strategies and plans, internal and external
• acting as an interface for public policy
evaluations, financial plans and administrative
dialogue between civil society and the
procedure manuals. Data collected by the dif-
government and business sectors.
ferent methods were systematically organized
into distinct databases which were the basis The case studies and the related analytical
for each written case study. The case studies papers are a useful tool for those who wish to
were coordinated by the Synergos research build foundations/CSROs around the world.
team, which then provided the funding to a Synergos hopes they will be widely used as a
cross-case analysis team for the preparation catalyst for the development and strengthen-
of three analytical papers. The two teams pre- ing of this important group of institutions that
pared condensed versions of the case studies provide financing to the voluntary sector.
4Research.
Acknowledgements Financial support for the project was provided
The case study project has involved the talent by the Aspen Institute, the Compton Founda-
and contributions of many individuals and tion, The Ford Foundation, The W.K. Kellogg
organizations over the last two years. We Foundation and the Charles Stewart Mott
would like to acknowledge their efforts and Foundation.
emphasize that the project would not have
been possible to complete without their con- In addition, a number of individuals made very
tributions: important contributions to various aspects of
the research: Kathleen McCarthy at the Center
• The Global Advisory Committee: Graça for Philanthropy, City University of New York,
Machel, Foundation for Community and James Austin at Harvard University pro-
Development, Mozambique; Cornelio vided valuable research advice; staff and
Marchán, Esquel Ecuador Foundation; board members of the case organizations
Ethel gave time, interviews and key background
Rios de Betancourt, Puerto Rico Community materials; Yvette Santiago, Miriam Gerace
Foundation; Kamla Chowdhry, Center for Guarena, Amelia Moncayo and Armin Sethna
Science and Environment, India; Aurora assisted in the coordination and production of
Tolentino, Philippine Business for Social the study
Progress; Paula Antezana, Arias Founda- documents.
tion,
Costa Rica; Maria Holzer, Polish Children
and Youth Foundation; Eric Molobi, The
Kagiso Trust, South Africa.
• The case writers: Teresita C. del Rosario,
Alejandra Adoum with Angela Venza,
Anthony D'Souza, Alfredo Ocampo
Zamorano with Margee Ensign and W.
Bertrand, Victor E. Tan and Maurino P.
Bolante, Maria del C. Arteta and William
Lockwood-Benet, Victor M. Ramos Cortes
and Lauren Blythe Schütte.
• The case studies research team: Betsy
Biemann, S. Bruce Schearer, John
Tomlinson, David Winder and Eliana Vera
at The Synergos Institute and Catherine
Overholt at the Collaborative for
Development Action.
• The cross-case analysis team: Darcy
Ashman, L. David Brown and Elizabeth
Zwick at the Institute for Development
5The Puerto Rico Community Foundation
Genesis and Origins ment challenges — particularly in the areas of
education, crime, and drug use — the Foun-
In June 1995, the Puerto Rico Community dation is playing a proactive role in supporting
Foundation (PRCF) marked the ten-year community initiatives to tackle these chal-
anniversary of its inception, which had lenges. With 3.6 million people (1990 census)
occurred during a period of hardening eco- living on 3,435 square miles, Puerto Rico is
nomic realities on the Caribbean island. one of the most densely populated areas in
Through a fortuitous intersection of private the world.1 A Spanish colony for four cen-
sector and community concerns, and the per- turies, Puerto Rico was ceded to the US
severance and commitment of the organiza- (along with the Philippines and Cuba) after the
tion’s leaders, supporters, and staff, the PRCF 1898 Spanish American War. Puerto Ricans
was able to take off in a relatively short period became United States citizens in 1917, and
— and now possesses an endowment of $10 the US President appointed
million and an annual program budget of over a Governor until 1948. In 1952, a new Consti-
$1 million. tution was adopted to create the Common-
wealth of Puerto Rico, with a unique relation-
While Puerto Rico still faces many develop- ship to
Table 1: Support to the Nonprofit Sector in Puerto Rico
1985 and 1990 (millions of US$)
1985 1990
Private
Individuals 18.1 51.2
Corporations 55.6 90.3
Foundations 1.0 5.0
Total 74.7 146.5
Public
Federal 32.6 36.8
Commonwealth of Puerto Rico 8.2 16.1
Municipal .2 1.0
Total 41.0 53.9
Grand Total 115.7 200.4
6the United States that allowed it greater self- were able to
governance. register 20-30% of their worldwide income in
Puerto Rico during peak years, generating a
A substantial economic boom during the
credit in their US tax returns. By 1984, this
1950s and 1960s — fueled by large inflows of
legislation was threatened with repeal. A lob-
US investment in light manufacturing because
bying campaign by the Puerto Rico Economic
of Puerto Rico’s low cost of production at the
Development Administration, known as
time — proved unworkable in the recessionary
Fomento, averted a complete repeal, although
1970s. While a middle class was created with-
substantial reductions were made in the
in one generation, rural migration to the cities
allowed
boomed, outpacing labor absorption capacity
tax benefits.
and resulting in a large migration of Puerto
Ricans to US industrial labor markets requiring Meanwhile, on the island, economic stagna-
unskilled labor. tion and politicization translated into a grow-
ing
The post 1975 economic development
disillusionment with government as the only
challenges of Puerto Rico have been extreme-
agent for solving Puerto Rico’s economic and
ly well analyzed (Weisskoff 1985, Curet 1986,
social problems. There was an increased
Dietz 1986, Marqués 1993) and include: high
recognition that the government could not
structural unemployment; low per capita
provide
income while exposed to a US cost of living
all the solutions, and that the nonprofit sec-
(most foodstuffs and consumer products are
tor — and corporate and individual donations
imported from the mainland); a reduced share
to
of
it — would need to expand. Nonprofit private
investment with a growing share of public
organizations began to proliferate, most of
participation in it; large external public debt
them the traditional cultural, educational or
($13.8 billion or 58.3% of GNP in 1992); and
health type.
income support transfer payments from the
US government to over half of all families. But a new kind of non governmental organiza-
tion also emerged, geared towards organizing
To mitigate the impact of the 1974-76 global
and serving its community, or solving the
recession, the US adopted incentives geared
serious and interrelated problems of youth
to job creation. Section 936 of the US Internal
unemployment, drug addiction, school
Revenue Service code allowed businesses
desertion, and crime.2 While many of these
attractive tax credits, and the island became a
groups remain small, some have grown to have
2 According to the 1990 Cen- leading tax haven for US manufacturing
island-wide recognition and run large organiza-
sus, only 52% of men and 62% investment. According to 1985 US Treasury
tions capable of well organized fundraising
of women graduated from high and Commerce Department data, Puerto
school. Unemployment exceeds campaigns. One of these is the Puerto Rico
Rican
20% of the labor force. And, Community Foundation, which was incorporat-
according to a 1993 study (by subsidiaries of US pharmaceutical multina-
the Consejo General de Educa-
ed in December 1984 and officially started
tionals represented 35% of their global assets
cion), income distribution fig- operations on April 1, 1985.
ures point to a large under- and 18% of their global sales — but only 4%
ground economy and an of the global employment generated by those A 1991 report titled Philanthropy in Puerto
uneven allocation of employ-
firms. The top beneficiaries of Section 936 Rico states that there are eleven major grant-
ment, education, and opportu-
7The Puerto Rico Community Foundation
making institutions in Puerto Rico with assets to Rico to know the island well enough to
totaling $75 million. In 1994, the largest grant make good grants…. During a previous
making program was Fondos Unidos (United visit to Puerto Rico…the Governor of the
Way), which granted approximately $6 mil- island…had asked why we only gave
lion, grants to one particular political party. I
followed by the Angel Ramos Foundation, with was
the largest assets ($54 million), which granted surprised. We had no idea that the organi-
approximately $4 million. The breakdown of zations that had received grants had a
the sources of this support is provided in particular political affiliation.
Table 1. Approximately a quarter of this total
The Ford Foundation’s interest in the project
($45.7 million) supported religious institutions.
became instrumental to the creation of the
Founding Factors3 PRCF. Ford Program Officer, Dr. William A.
The creation of the PRCF can be traced to Díaz, a Puerto Rican by birth and a life-long
the interest of the National Puerto Rican resident of New York City recalls: “After the
Coalition (NPRC), a Washington, DC-based forum in Puerto Rico, the next time the project
group, in lobbying for what its members con- took a step forward was during a visit to the
sidered Puerto Ricans’ fair share of US foun- Ford Foundation of Louis Nuñez and Dick Kin-
dation money.4 To address this concern, ney,” who discussed the idea of creating a
NPRC organized a meeting in June 1983 at fund for Puerto Rico similar in concept to the
which private, nonprofit organizations on the United Negro College Fund, although it would
island were represented. More than two dozen support areas besides higher education. The
companies were invited to attend the forum, fund would solicit money from individuals,
but only the President of the Schering-Plough corporations, and foundations. The Ford
Corporation’s Puerto Rican operations, Foundation was committed to the concept of
Richard Kinney, came. community foundations
as a vehicle for change in the mainland, and
Representatives of the Rockefeller Founda-
brought into the discussions Homer
tion, Carnegie Corporation and the Ford Foun-
Wadsworth, recently retired head of the Cleve-
dation attended the meeting, at which the
land Foundation. Wadsworth recommended
idea of a grantmaking intermediary was pro-
that Ford commit enough money to the pro-
posed for the first time. Upon meeting poten-
ject to make a genuine expression of interest
3 This study relies heavily for tial Puerto Rican donors and grantees, the US
background on Roberto E. and that it take the initiative in urging other
foundations became satisfied that local orga-
Bouret’s The Puerto Rico Com- foundations to come on board.
munity Foundation, A Brief His-
nizations were sufficiently organized to benefit
tory: Origins and Early Develop- from a foundation-like organization locally. Many people interviewed in Puerto Rico iden-
ment, 1983-1988.
Further, the US foundations had come to tify the creation of the PRCF as a “Ford pro-
4 According to an NPRC study,
between 1979 & 1981, US foun-
believe that such an organization could make ject.” But Berresford stresses that all the US
dation grants to Puerto Rican better grants in Puerto Rico than could their foundations were equally committed to the
organizations represented
own staff. According to the Ford Foundation’s idea and Ford’s larger contribution was just a
0.02% of their total grant bud-
gets, while Puerto Ricans Susan Berresford: function
account for 5.5% of the total
of its relatively larger size. Berresford also
US population. We had come to the conclusion that our
5 “Ayuda Puerto Rico," Forbes: says that the creation of the foundation was a
staff could not spend enough time in Puer-
The Forbes 500, Special Issue, group effort involving discussions between US
8foundations, local civic leaders, community Smith Kline Beecham and a veteran
organizations, and potential corporate donors. fundraiser;
It was perceived as the best alternative for
• Manuel Dubón, a lawyer and real estate
efficient grantmaking and consensus-building.
developer;
An article in Forbes quoted Ford Foundation
President Franklin Thomas as viewing the new • Salvador Casellas, a prominent lawyer
foundation as far better able than its mainland and former Secretary of the Treasury of
counterparts “to identify appropriate efforts on Puerto Rico;
the island.”5
• Jaime Fonalledas, President of a real
Díaz became deeply involved in the project, estate
overseeing Berresford’s suggestion for a feasi- conglomerate; and
bility study to ascertain the need for support
for such an institution on the island. Ford • Ethel Ríos de Betancourt, a university
awarded the NPRC a $30,000 grant for the professor and administrator.
two-year
Ledesma admits to having been skeptical at
feasibility study. Alex W. Maldonado, a leading
first, but soon became deeply involved, calling
Puerto Rican publisher, public relations
on many Puerto Rican business leaders to
executive, and journalist was asked to under-
present the idea of the PRCF. He later became
take it, and he conducted over 100 in-depth
the President of the first Board of Directors.
interviews, familiarizing many individuals with
This was the first time the mainland Puerto
the concept of the foundation and sounding
Rican community worked with the islanders
out potential donors.
on a major project. The NPRC identified a
Berresford describes the creation process of major source of funding — US foundations;
the PRCF as a series of discussions with an Kinney
expanding number of people. Initially, the of Schering-Plough identified another — 936
conversations were about the possibility of corporations.
establishing a grant-giving foundation. Quickly
Kinney’s interest in the development of the
the meetings moved to what the mission of
PRCF was key to its feasibility. Schering-
the PRCF should be, who should serve on the
Plough was a 936 pharmaceutical corpora-
Board, and how to secure funding. Maldonado
tion with three manufacturing plants on the
and Nuñez recruited the most enthusiastic of
island and headquarters in New Jersey. It
the Puerto Ricans interviewed for the feasibili-
had close ties
ty study to become part of the founding team
in the US with the NPRC. Kinney invested a
including:
6 In the US, a legal difference tremendous amount of time and effort and
exists between a foundation
• Héctor Ledesma, President of the largest involved Schering’s CEO, Robert P. Luciano,
and a community foundation.
The IRS gives the community Puerto Rican bank, the Banco Popular; in establishing the PRCF. Schering-Plough led
foundation more freedom in its other companies in making an early financial
activities but it has to pass a • Raymond González, partner in charge of commitment and pledged $100,000 a year for
public support test and funding
Price Waterhouse in Puerto Rico; three years. Luciano also volunteered to ask
must come from a variety of
sources. No law governing other 936 companies for contributions.
foundations exists in Puerto
• Roberto Bouret, Vice President for public
Rico, where they are simply relations of the pharmaceutical company Maldonado and Kinney realized that the PRCF
9The Puerto Rico Community Foundation
presented an opportunity for US companies to PRCF received a seed grant of $250,000 from
undertake a high profile commitment to Puer- the Ford Foundation, and grant commitments
to Rico, enhancing their corporate credibility totaling nearly $4 million from five founda-
locally and their standing in Washington. Their tions: Ford, Rockefeller, Carnegie, Mott, and
corporate giving and community relations the John D. and Catherine T. MacArthur Foun-
record in Puerto Rico up until then was mini- dations. This giving was structured as a “chal-
mal. As a result of the Ford Foundation’s lenge grant” to encourage individual and cor-
endorsement, PRCF had become a big-league porate donations. PRCF had three years, until
project capable of rallying support at the CEO, March 31, 1988, to raise $8 million in a two-
parent-company level. PRCF founders stress for-one match to receive the $4 million
that, as pragmatist businessmen, they were pledged by the US foundations.
“taking advantage
Soliciting contributions or pledges quickly
of 936’s ailing few remaining years.” They
became part of the process of the feasibility
also
study and, by 1985, the PRCF had commit-
all agree that the PRCF was a good cause
ments totaling $2.5 million from eleven 936
and that there certainly was need for it in
companies, two local banks, and several
Puerto Rico.
smaller donors.
In order to take advantage of the US tax code
Jaime Escalona, present chairman of PRCF’s
allowing 936 parent companies to deduct
Board, who worked at the time with Eli Lilly in
contributions to the PRCF endowment, a non
Puerto Rico, recalls how such 936 support
profit community foundation structure was
was made possible:
recommended and adopted.6 The PRCF was
incorporated in Puerto Rico and is registered I received a call from Héctor Ledesma,
with the US Internal Revenue Service. Since who was President of the Banco Popular,
the tax incentives for philanthropy were asking for support for the PRCF. It was
greater in the US, many 936 corporations con- important that such people were involved,
tributed through their own US corporate foun- people that were credible and respected in
dations. the business community. We met and he
explained the project and the involvement
In the process of completing the feasibility
and commitment of the Ford, Rockefeller,
study, two other groups of people became
and Carnegie foundations. These were
part of the project — entrepreneurs and exec-
names that people at headquarters would
utives of Puerto Rican corporations and gov-
recognize. It also meant that the project
ernment leaders. These local groups integrat-
would have a chance to succeed. I was
ed the traditional elite sectors such as the
able to approach headquarters for support.
largest commercial bank on the island, leading
private conglomerates, law firms, and senior Thus, a diverse coalition of interests came
former government members knowledgeable together to form the PRCF:
about US-PR corporate tax affairs. The local
group was perceived as sophisticated by US • The US-based Puerto Rican lobby;
foundations and
• The 936 companies that seized the
conveyed the need for the PRCF to the 936
opportunity to show interest in Puerto
community.
10Rico’s and enhance the quality of life in Puerto
development when they were seeking Rico.
support for continued tax incentives;
Modeled after community foundations in the
• US foundations that saw the opportunity to United States, the PRCF was intended by its
improve the level and quality of grants to founders to act as a catalytic agent in stimu-
organizations and groups on the island lating innovative solutions for the island’s
while problems. The mission statement listed four
leveraging their resources locally; and major objectives:
• A group of Puerto Rican business leaders • Fostering action on the major social and
who had become increasingly committed economic problems;
to the private nonprofit sector as a vehicle
• Strengthening the sense of community;
for
social and economic improvement. • Encouraging private philanthropic
activity; and
The founders had a profound impact on the
Foundation as it exists today, providing and • Sponsoring research to address important
delineating its ideological base, structure, mis- social and economic issues.
sion statement, and principal program areas;
selecting original Board members and its first
President; and providing technical assistance Governing Structure
in procedural and administrative matters. All The original by-laws give governing power to
the founders who became Board members the Directors/Trustees, who are the voting
have retired since the by-laws only permit two members of the corporation and are responsi-
consecutive three-year terms. But US founda- ble for supervising, managing, and controlling
tions that were among the original donors still all its affairs, business activities and policies.
support PRCF programs, as do many of the The Board meets four times a year and
initial corporate donors. approves all grants awarded by the Founda-
tion. Board
Governance members are elected to staggered three year
Mission terms and the by-laws establish a maximum
The PRCF was conceived as a grantmaking of two terms (six years). The by-laws require
institution with a primary aim of addressing Directors to disclose affiliations to prevent
the economic challenges of the island. conflicts of interest.
According Board officers — the Chairman, Vice-Chair-
to its mission statement: man, and Treasurer — are elected at the regu-
The Puerto Rican Community Foundation lar annual meeting of the corporation. The by-
is an instrument to garner the energies and laws specify the creation of four Board com-
resources of the Puerto Rican people in mittees:
addressing this society’s principal socio- • The Executive Committee, created by the
economic problems. It seeks to contribute officers of the Board of Directors, is
to the achievement of a healthier economy empowered between Board meetings with
11The Puerto Rico Community Foundation
all the powers of the Board; constituted, the advisory council was in place,
the mission statement was drafted, and staff
• The Program Committee is appointed by
were recruited. These decisions had been
the chairman to screen staff grant proposals
made by the founders, many of whom
to ensure compliance with programmatic
became part of the original Board of Directors.
priorities before they are brought to the
full Many of the discussions revolved around who
Board; should become members of the Board of
Directors and the right balance between cor-
• The Investment Committee is appointed by
porate leaders and community representa-
the chairman to oversee the use of funds
tives. US foundations and the NPRC wanted
and is responsible for procuring the
to have a large number of community repre-
maximum yields for the Foundation’s
sentatives and encouraged diversity. Local
investments.
business leaders stressed the importance of
• The by-laws also created an Ad-hoc including recognized credible business lead-
Committee, originally created to lobby for ers in order to raise funds. “A tacit compro-
changes in tax laws regulating charitable mise was reached. The founding Board was
donations. This committee has not been essentially composed of the traditional com-
formalized by the chairman. munity leaders from the business and profes-
sional sectors, but representatives from grass-
The Executive Committee meets approxi- roots community groups were gradually and
mately once a month; the Program Commit- systematically added.” (Bouret)
tee meets before Board meetings to review
proposals; It was important to the founders that Board
and the Investment Committee meets regular- members were credibly non-partisan. One
ly, though less frequently, to discuss the way of achieving this was to appoint people
financial policies of the PRCF. The by-laws with
also allow a recognized interest in the nonprofit sector.
the creation of an Advisory Council of up to Although some Board members had well-
fifty members nominated by the Board to known political affiliations, the original Board
serve at the pleasure of the Board. included individuals from all major political
parties.
The history of the PRCF governance is easily
distinguished into three phases — develop- Diversity efforts included recruiting Board
ment and diversification, consolidation and members with expertise in several of the inter-
change est areas defined for the Foundation: medi-
for the future. cine, arts, education, and community organi-
zations. In the business area the group includ-
Phase I: 1986-1988 — Development
ed lawyers, bankers, and public relations
and Diversification
executives. To a certain degree, the Board still
The First Board of Directors: has the same areas represented as a result of
Assuring Diversity how vacancies are filled. Although the original
When the PRCF began operations in April Board tilted towards business leaders, many
1985, its sixteen-member Board was officially of them had been traditionally active in the
12nonprofit sector. programs and other activities and make
It included mainland Puerto Ricans, communi- observations and recommendations to the
ty organizers and a number of women. No Board. It was formed at the suggestion of
other grantmaking institution in Puerto Rico Wadsworth,
had such diversity. in response to the debate of bringing diversity
to the Board. Bouret explains:
The candidate for President was approved at
the first Board meeting and the by-laws were These persons…influential members of the
also approved. A Board committee was community, would not have otherwise
formed to review the mission statement and it been in a position to contribute directly to
was adopted after some minor wording the shaping of the Foundation and the def-
changes. inition of its priorities…[The council]
An important decision made by the first Board played an important role of formally bring-
was to start big in order to increase the foun- ing to the foundation very important think-
dation’s visibility and attract grant inquiries ing, especially that of Teodoro Moscoso,
and donations. Thus, over half a million US its chairman…. But the Council had no
dollars, $514,187, were approved in grants in specific or legal authority over the Board
the and thus its mission was vague.
first year.
The first inkling of adversary relations
During this period the Board organized two between the Advisory Council and the
retreats for Directors. The first one, held when Board of Directors was felt…in December
the Board was first instituted, was led by 1985. It revolved around the issue of staff
Dwight Allison from the Boston Foundation responsibilities. That most damaging of
and examined the role of a Board Directors. internecine struggles, the issue of divided
The second, in 1988, evaluated the early years loyalties, was beginning to appear and to
of PRCF’s operations and discussed future have a cooling effect on the personal rela-
directions. tionship of the Board chairman, Héctor
Ledesma, and the advisory council Presi-
dent, Teodoro Moscoso. (Bouret)
The Advisory Council — A Need for Clarity
and Direction Both men were fiercely loyal to the concept of
The original by-laws officially created the the PRCF so the conflict was resolved, but the
Advisory Council, composed of about thirty role of the council waned until it was formally
leaders from a wide range of sectors. It was dissolved. Other members, including journalist
headed Maldonado and Heidi Calero (who later
by Teodoro Moscoso, founder of Puerto became a Board member) thought the Adviso-
Rico’s industrial program, former US ambas- ry Council’s failure stemmed from a lack of
sador purpose or
to Venezuela and Director of the Alliance for a clear role. Nevertheless the council’s exis-
Progress. His leadership allowed the PRCF to tence allowed a large number of prominent
call on large number of business people and professionals to become acquainted with the
community leaders. The council was to meet PRCF and serve as its talent bank.
twice a year to review PRCF’s mission, PRCF President Rafael Fábregas and Chair-
13The Puerto Rico Community Foundation
man Ledesma resigned from their posts for business and was periodically renewed
personal reasons at the end of 1987 and the through elections that sought to maintain a
PRCF lost two of its most active fundraisers. balance of business and community organizer
The Board requested and was given a nine- involvement. Dubón, viewed as energetic,
month extension of the deadline, until Decem- decisive and
ber 31, 1988, to meet the challenge grant. The committed served as chairman of the board
funders also from December 1988 to 1993. He is credited
recognized an in-kind contribution of media as being key to helping the organization meet
time and space for a public relations cam- its challenge grant targets. The involvement of
paign worth approximately $1.3 million that, each of the Chairmen in running the PRCF
added to the has always been great although their styles
$7 million already raised by PRCF, met the differed. Betancourt explains: “Each of them
challenge grant. has his
own particular style so I have worked with
Ethel Riós de Betancourt, who had resigned
each one a little differently but always in very
from the Board to become Vice President of
close
programs under Fábregas, became acting
contact.”
President of the PRCF and very soon was
named President by the Board.
Phase III: 1994 -1995 — Changing
Leadership
Phase II: 1989-1993 — Consolidation Jorge Fuentes, an engineer, entrepreneur and
The successful completion of the challenge former treasurer of the Board was elected
grant campaign closed the initial chapter in Chairman for 1994, when he had served on
PRCF’s history. After that, the new Chairman the Board for five years and only had a year
and President — Manuel Dubón and Riós de left in his term. The Board considered review-
Betancourt — led PRCF through a five-year ing its
period of operational growth and learning by-laws to change the six-year term limit but,
which consolidated and expanded the mission after some debate, decided that it was wiser
and to maintain the limits on tenure. Fuentes com-
programmatic direction set by the founders ments, “It is important to renew the Board,
and first Board. The Foundation engaged in you get new energy and new insights.”
direct
grantmaking and also began to serve as an Therefore, in 1994, the Board elected Jaime
intermediary for channeling or administering a Escalona, a Director since 1990, to serve as
range of other foundation grants to local initia- chair from 1995 to 1996. At the time of this
tives. It spearheaded research on issues of appointment, Escalona was retiring from Eli
youth education and employment and techno- Lilly, a 936 corporation. Like Dubón and
logical innovations, with the aim of informing Fuentes, he had a tradition of nonprofit ser-
the design of ongoing and future programs. vice serving on the Board of Fondos Unidos
(Details on activities during these years are and the Ana G. Méndez University System, a
found in the next chapter.) leading private university.
The Board, meanwhile, transacted normal
14Strengthening Governance members began to keep time sheets in order
In 1993, the PRCF received a grant from the to determine the staff cost of the administered
Mott Foundation’s Organizational Develop- programs.
ment Assistance (ODA) program to strengthen
In the ensuing years, Betancourt believes that
the governance of the institution. The Council
the PRCF has entered a new phase of reflection
on Foundations facilitated a workshop where
and renovation in its development. In June
PRCF Board members and staff analyzed
1995, the PRCF celebrated its first ten years at
trends and discussed long-term strategic
a luncheon that brought together many of the
issues. Board member Calero explains why
founding members, past and present Board
she and her colleagues found the experience
members, donors and grantees. The gathering
positive:
provided an additional opportunity for reflection
You need time away from the day-to-day and, subsequently, PRCF submitted a proposal
business of the Foundation to reflect about for assistance in strategic planning to the Ford
what has been done and what needs to be Foundation.
done. There is no time at the regular meet-
ings to critically examine the past or the
future. The off-site meeting created an
environment where Board members and
staff were able to speak their minds.
At the retreat, the Board decided to evaluate
and refine the mission statement, and it dis-
cussed the need for a strategic planning
process. To stress its commitment to commu-
nity development, one of the retreat resolu-
tions was to officially change the Foundation’s
name in Spanish from Fundación de Puerto
Rico to Fundación Comunitaria de Puerto Rico
— including the word “community” which had
always been in the English name but not in
the Spanish name.
As Board members analyzed program trends,
they noticed that over time the programs
administered by PRCF (funded by grants
received from US foundations) and pass-
through grants had grown in proportion to
grant programs funded directly by PRCF
resources. The Board began a process of
evaluating
programs administered by the Foundation to
determine the right balance between PRCF
funded programs and other programs. Staff
15The Puerto Rico Community Foundation
Staffing and Organization from the Board of Directors to become Vice
President for programs, working to establish
Initial Staffing the
The founders of the PRCF spent considerable programmatic direction of the Foundation.
time debating who should be the President of She has played a decisive role in shaping
the Foundation. The Ford Foundation pro- the
posed a candidate who was a Puerto Rican Foundation and Board, staff members, and
with experience in community organizations outsiders praise the credibility, commitment
and foundation experience in Boston. The and quality of Riós de Betancourt’s efforts.
Puerto Rican members insisted that it was PRCF founders interviewed are proud to
necessary to find someone credible to the have her heading the institution and believe
Puerto Rican business community. Ultimately she has enhanced PRCF’s image and has
the founders reached a compromise appoint- been excellent in forming alliances with other
ing a business leader as President to assist in organizations, both in Puerto Rico and the
raising funds and creating the position of vice United States, that have greatly increased the
president of programs to provide strong lead- effectiveness of
ership in that area. At its first meeting the the PRCF.
Board appointed Rafael Fábregas, a certified
public accountant and respected retired busi-
ness executive who, through his connections
Current Staff
in the business world, opened many doors for
The permanent staff of the Foundation is
the PRCF. Fábregas and first Board chair,
divided in three areas: Administration, Devel-
Ledesma, worked very closely together.
opment, and Programs. The Directors of
The founders had also identified many of the these areas report to the President and
original staff including Rafael Pagán, a lawyer, attend Board
as administrative manager and Rafael Torrech, meetings. Each of the programs administered
who had worked with the mainland Puerto by the PRCF has its own staff, including Pro-
Rican youth organization ASPIRA, as the first gram Officers with relevant expertise who
program officer. During most of 1985, the work relatively independently and report to Dr.
PRCF received technical assistance and Nelson Colón, the Director of Programs. The
training from US foundation programs and staff are highly professional with a great
administrative officers. Patricia Biggers, a amount of experience, expertise and educa-
Spanish-speaking program officer, was loaned tion; staff turnover
by the Ford Foundation to work closely with is low.
Torrech on program guidelines and proce-
Board members stressed the importance of
dures. PRCF also obtained the
the staff in setting priorities for the organiza-
services of Michael Hoffman from the Cleve-
tion. To
land Foundation, who assisted in setting up
a great degree the staff, given their day-to-day
the administrative procedures and helped adapt
involvement, control the agenda of Board
an operations manual he had devised to
meetings.
PRCF’s situation.
Early in 1986, Riós de Betancourt resigned
16Program Operation and if the Foundation concentrated efforts on
the other areas, it would help crime and drug
Evolution
prevention.
The PRCF programs reflect the mission state- The PRCF seeks to maintain a balance
ment prepared by the founding members. As among priority areas, but does not attach
a grantmaking institution from the very begin- quotas to them.
ning the founders decided the Foundation
would sponsor programs island-wide and
Program Evolution
would not concentrate its efforts in the San
Riós de Betancourt recalls that during the
Juan metropolitan area.
PRCF’s first years there was a lot of discus-
sion over defining priorities. The needs in
The types of programs have remained fairly
Puerto Rico were great and there was pres-
constant since 1985 and can be divided into
sure from different sectors to address them
three main categories:
all. Focusing was a challenge. Former Presi-
• The grantmaking program; dent Fábregas notes the importance given in
the beginning to science and technology and
• Programs sponsored by the Foundation; entrepreneurial development in grantmaking
and programs: “We started experimenting with
industry-university collaborative research in
• Programs administered by the PRCF but
the pharmaceutical industry and business
funded by other donors.
incubators — innovative efforts not taking
The PRCF also runs the Permanent Fund for place elsewhere in Puerto Rico,” he says.
the Arts, the only program with an endowment
The contacts provided by the Cleveland Foun-
of its own funded by a combination of
dation’s Wadsworth, who had an extensive
resources from the US National Endowment
network with US foundations and companies,
for the Arts, corporate donors and the PRCF
proved invaluable to the PRCF. Riós de Betan-
itself.
court recalls that Wadsworth took her to visit
The official priority areas have scarcely the chairman of the Robert Wood Johnson
changed since they were identified in 1985 as Foundation, Dr. David W. Rogers, which was
follows: interested in helping — but only through a
designated grant. After Betancourt described
• Economic Development;
the work of PRCF’s Adolescent Health Task
• Community Development; Force, the Johnson Foundation gave PRCF a
planning grant which led to the establishment
• Art and Culture; of the Adolescent Health Center. The Johnson
Foundation supported the Center for four
• Health;
years.
• Education; and
Support from the Pew Charitable Trusts for the
• Crime and Drug Prevention — the only Adolescent Health Center also came about
area through personal contacts of PRCF’s friends —
dropped in 1995, as the Board deemed that notably Berresford, who accompanied Betan-
17The Puerto Rico Community Foundation
court to Philadelphia to visit the President of the stro Barrio to join them in submitting a pro-
Pew Charitable Trust. The visit resulted in sup- posal to HUD. PRCF had the infrastructure to
port for the PRCF’s Adolescent Health program, administer the grant and the expertise in
which eventually became the Adolescent Health grantmaking and Organizadora Nuestro Barrio
Center. had the necessary expertise to provide the
training component of the program.
New program ideas come about in a variety of
ways, Riós de Betancourt says. Some are a Yet other programs were developed as a
response to a perceived need by the Board of match between the interests of the PRCF and
Directors, others are the result of learning and funders. When the PRCF approached the
experience. She recalls that very early on there Carnegie Corporation for additional support,
was a discussion at a Board meeting about Carnegie was interested only in funding a spe-
crime: cific program. The PRCF explained its inter-
ests and priorities and a match was found in
Board member Salvador Casellas said at
the Program to
the meeting, “If we are going to be credible
Renovate the Middle Schools, a program that
about addressing Puerto Rico’s social
Carnegie had supported in several states.
problems, we have to do something about
Carnegie gave the Foundation a planning grant
crime.” So we had discussions … and
and has continued to support the program for
designed and established a program. The
several years.
result was the media drug prevention cam-
paign. After [that first effort], we have On other occasions, the staff and Board have
learned that we need to begin working with responded to special situations and opportu-
youth earlier — before drugs and crime. In nities. For example, while the Foundation had
a sense, our current program focusing on made it a policy not to fund relief efforts, the
the self-esteem of youth is a result of what destruction of Hurricane Hugo in 1989 was
we have learned about the problems of too great to ignore. The staff met and decided
adolescents over time. PRCF had to respond: They would evaluate
on-going projects and help them restore nor-
Other programs have been brought to the
malcy; all program and grantmaking activity
attention of the Foundation by other groups or
for the balance of the year would be concen-
organizations. The Community Development
trated on the island’s hardest-hit areas and
Housing Organizations program (CHODOs)
contingency plans for dealing with catastro-
began when the US Department of Housing
phes would be developed. The PRCF Board
and Urban Development (HUD) approached
approved the staff’s plan and voted to create
PRCF about submitting a proposal. PRCF
a Disaster Relief Fund to provide help to the
evaluated the program, which was geared at
communities most severely affected by Hurri-
training community groups to be able to apply
cane Hugo. The Foundation raised $235,000
for and administer HUD housing grants and
from donors such as the Pew, Angel Ramos,
decided it was compatible with its mission. In
Mott, and UPS foundations and UNICEF. In
addition, the PRCF had developed contacts
addition, PRCF contributed $150,000 for a
over time with community groups and knew
total of $385,000 disbursed in grants between
which ones were ready for the program. The
1989 and 1990.
PRCF selected the group Organizadora Nue-
18This response by PRCF’s Board and staff illus- Over time, the PRCF has emphasized creation
trates the organization’s flexibility to operate of self-sustaining community groups that can
effectively even in changed circumstances. help themselves. In addition to focusing its
The PRCF had an infrastructure in place to grantmaking on community groups, the
evaluate petitions for donations and compa- PRCF’s staff has devoted valuable time to
nies took advantage of this to channel dona- help these community groups organize them-
tions through the PRCF. The PRCF made an selves. These services represent a growing
effort to channel the grants to its own priority share of unallocated operational expenses.
areas and, for example, established a program More recently, the PRCF has started a loan
to help rebuild damaged schools. program to help
community-run enterprises. In 1994 it granted
three small loans totaling $70,000 to help
these enterprises buy equipment to become
financially self-sufficient.
In addition, PRCF has decided to focus on
adolescence as the critical period of interven-
tion in order to have a significant impact on
the future of Puerto Rico. As the Foundation
has worked to solve the social problems in
Puerto Rico, staff have become increasingly
convinced that there needs to be intervention
in the early teen years. Thus, all PRCF activi-
ties emphasize programs and projects
addressing adolescents, an area in which the
organization has built significant expertise in
both funding and administration of programs.
In line with its explicit founding mission of
promoting philanthropy, PRCF has expanded
this role elsewhere in the Caribbean and Latin
America, advising groups on how to incorpo-
rate as non profits, how to choose and devel-
op a Board of Directors and how to write
grant
proposals. Some of the organizations it has
assisted, such as the PR Downs Syndrome
Foundation, have become sizable and
successful.
At present the PRCF is exploring the possibili-
ty of collaborative projects and is receiving
technical and financial assistance from the
Ford Foundation to develop this concept.
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